For some, filing for bankruptcy seems to be a very unappealing financial move. Some people believe that bankruptcy is only for those who had been irresponsibly swiping their credit cards, which creates a little bit of stigma. Although this might be true for some bankruptcy filers, the website of Gagnon, Peacock & Vereeke, P.C. says most people see the need for bankruptcy due to different life-changing events, such as divorce, child support, marriage, or death of a family member.
Bankruptcy helps you realign your finances and get back on track during financial hardships. Depending on your situation, you may choose to file for Chapter 7, Chapter 11, or Chapter 13 bankruptcy.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is a process to eliminate almost all of your unsecured debts within a short period of three to six months. In order to be qualified for Chapter 7 bankruptcy protection, your income must be within certain guidelines set by the bankruptcy means test. So if your assets are below the median, and you don’t have stable source of income, you may consider filing for Chapter 7 bankruptcy.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is perfect for those with assets higher the median, and for those with stable source of income. Unlike Chapter 7, Chapter 13 bankruptcy eliminates almost all types of unsecured debts. However, there are some distinct differences between these two types. For instance, individuals qualified for Chapter 13 bankruptcy can get rid of certain taxes, can cram down certain types of loans, and can discharge certain other debts arising from a divorce or legal separation (excluding domestic obligations, such as child support and alimony).
Chapter 11 bankruptcy
Chapter 11 bankruptcy is for individual businesses whose debts are higher than the limit set by Chapter 13 bankruptcy. With this type of filing, businesses owned by a corporation, partnership or limited liability company are able to restructure their finances while operating as normal. However, some businesses are reluctant in filing Chapter 11 because it can be too time-consuming and expensive.Read More